Practices Areas

Resourceful Texas Bankruptcy / Financial Restructuring Law Firm

ASSISTANCE WITH DEBTOR AND CREDITOR MATTERS IN TEXAS

The bankruptcy law firm of Hoover Slovacek, under the leadership of Edward Rothberg, is a valuable resource for our debtor, creditor, and equity holder clients in the state of Texas, including Houston, Austin, San Antonio, Dallas and Corpus Christi. We often obtain results in the most difficult circumstances.

Our attorneys have broad experience representing debtors, equity holders, secured lenders, unsecured creditors, lessors and creditors’ committees at every stage of the reorganization process, both in and out of court. Including both debtor and creditor work in our bankruptcy practice allows us to maintain a more neutral perspective and better anticipate the reaction of opposing counsel or the Court to a particular strategy.

For debtors, we have successfully restructured debt both inside and outside of Chapter 11. During our initial consultation, we try to determine whether or not an out of court restructure makes sense as out of court restructures are generally more efficient and less expensive than Chapter 11. We also consider the federal tax consequences of the restructure and work hard to avoid the loss of tax benefits such as net operating loss carryforwards. In 2016, Hoover Slovacek won the Large Turnaround of the Year Award issued by the Chicago Chapter of the Turnaround Management Association for the out of court workout of the CECO Pipeline Company. Our creditor work involves representing lending institutions and trade creditors, primarily in Chapter 11 business reorganizations. We also defend creditors and equity holders against preference and fraudulent transfer adversary proceedings.

Our insolvency and restructuring team is able to provide innovative solutions for distressed businesses, through out-of-court workouts, financial restructuring and, if necessary, Chapter 11 bankruptcy. We have represented businesses in every economic sector including manufacturing, energy, healthcare, distribution, construction, service based companies, and commercial real estate developers. We also represent private equity companies in connection with the acquisition of distressed businesses and restructuring underperforming portfolio companies.

In 2015, oil and gas emerged as the hardest hit sector in need of restructuring. This created a huge problem initially for oil field service companies and currently for exploration and production companies. In addition to a decline in revenue, these companies are facing maturing loans that are difficult to refinance. Our Houston based law firm team of experienced practitioners has extensive experience in navigating through these situations and successfully negotiating extensions, renewals and forbearance agreements on such loans. Where those efforts failed, we have successfully extended the maturities in the context of a confirmed Chapter 11 Plan. In these kinds of cases we often team up with experienced turnaround consultants who manage business operations through the crisis and develop realistic business plans designed to exit bankruptcy with positive cash flow and a solvent capital structure.

Bankruptcy Accomplishments

The primary goal in any Chapter 11 case is reorganization, which generates a positive return to all of the stakeholders. Since 2010, our bankruptcy team has confirmed reorganization plans in over 33 cases while representing debtors, creditors and equity holders. This does not include our extensive work completing dozens of out of court workouts. One of the benefits of out of court workouts is that the struggle can remain confidential. Therefore, we cannot identify them here.

The cases listed below demonstrate the multiple ways distressed commercial and real estate borrowers can use the bankruptcy process to resolve varied problems. For instance:

We also carefully consider the tax issues related to bankruptcy. This is a multi-disciplinary practice for our firm. Our real estate lawyers, litigators, transactional lawyers and tax attorneys are at your disposal throughout the bankruptcy process.

CREDITOR REPRESENTATION

TXCO ResourcesRepresented seven oil field services companies with claims of $21 million. Through our substantial efforts, our clients received a cash payment in full satisfaction of their claims, with interest and attorneys’ fees.

Vantage ForceRepresented mezzanine lender in a successful reorganization of this staffing company.

A Plus National ManagementRepresented a bank in connection with a financed sale of the assets of this bus transportation company to a solvent third party.

GALP Highcross, GALP WatersRepresented an investor who purchased discounted notes on two apartment projects located in Harris County, Texas. After the borrowers filed for bankruptcy, we successfully restructured the debt.

GALP Sierra VistaRepresented an investor who purchased a discounted note on an apartment project located in Harris County, Texas. After the borrower filed for bankruptcy near Seattle, Washington, we participated in a sale to a third party through the bankruptcy process.

EQUITY HOLDER REPRESENTATION

Abatecola LeasingRepresented the equity holders/guarantors in a successful reorganization of this concrete pumping business through negotiation with multiple lenders.

Hidalgo Logistics, LLCRepresented the equity holders/guarantors in a successful reorganization of this freezer storage and logistics service business.

Texla Hotels, LLCRepresented the equity holders/guarantors of a La Quinta Inn and Suites situated on 1.681 acres in Missouri City, Texas in a successful reorganization by negotiating with the secured lender, franchisor, taxing authorities and various M&M lien claimants.

WMF Airport HotelRepresented the equity holders/guarantors of the Holiday Inn located at Hobby Airport in a successful reorganization. In this case, we obtained an injunction preventing the lender from pursuing the guarantors so long as WMF remained current on the restructured debt.

S.H.I. InvestmentsWe represented the equity holders of this entity which owned an apartment project subject to a lien held by a Commercial Mortgage Backed Security Trust. The lien holder was extremely adverse. Our actions in the bankruptcy case convinced the CMBS to sell the note to another lender at a discount. We then confirmed a consensual plan with the new lender.

DEBTOR REPRESENTATION

Anloc, LLCRepresented this oil and gas company in a successful reorganization which resolved multiple, extremely complex commercial litigation disputes in the bankruptcy court.

Atom InstrumentRepresented this manufacturing company in a successful Chapter 11 reorganization which involved competing claims to intellectual property.

Dia-Den, Ltd.Represented this owner of a single tenant industrial facility with a total of 154,297 square feet of gross building area on 37.94 acres of land located in Tomball, Texas, by filing Chapter 11 to avoid foreclosure and then successfully restructuring the debt with the secured lender, which resulted in the Chapter 11 case being dismissed by mutual agreement, and the payment in full of all unsecured and administrative claims.

Fortune LendingRepresented this developer of a 397 acre undeveloped tract of land located in Fort Bend County, Texas by filing Chapter 11 to avoid foreclosure and then successfully restructuring the debt.

LTG ForumRepresented this Harris County, Texas apartment project by filing chapter 11 to avoid foreclosure and then successfully selling the complex through the bankruptcy process.

Mansions at Hastings Green, Mansions at Hastings Green SeniorRepresented two newly built tax-credit apartment projects that due to the 2008 financial crisis could not convert their construction loans to permanent loans. Through the bankruptcy process, we achieved that conversion by confirmation of a plan of reorganization that extended their maturities.

Midway GroupRepresented this owner of 27 acres of undeveloped Harris County, Texas land restricted by deed to commercial only use. We used the bankruptcy process to modify the deed restrictions thereby converting a portion of the tract for multifamily use. To achieve this goal, we also negotiated and obtained approval from the Texas Commission on Environmental Quality disposing of certain environmental matters. This dramatically increased the value of the property and enabled a successful debt restructuring.

Midtown Scouts Square Property, LPRepresented this limited partnership that owns the mixed use office building located at 1911 Bagby Street, Houston, Texas in its successful reorganization through negotiations with the bank holding the first and second notes, and the SBA and its servicer on the third and interim loan. The Chapter 11 was filed due to contentious litigation. The litigation was resolved as well as agreements reached with the secured lenders and other creditors.

Morton & PorterRepresented this residential developer of a 57 acre undeveloped tract of land located in Fort Bend County, Texas by filing Chapter 11 to avoid foreclosure and then successfully selling the property through the bankruptcy process.

Mud King Products, Inc.Mud King is a Houston, Texas based oilfield services company whose core business is selling replacement parts for mud pumps. The chapter 11 filing was initiated due to contentious litigation with one of the largest oilfield services companies. With co-counsel, we successfully defended our position and the claim was reduced by multi-million dollars allowing the company to successfully reorganize and eliminate continuing litigation fees that were impairing the financial well being of the company.

Multiworth Partnership, LTDRepresented this owner of a flea market located in the Rio Grande Valley. We successfully settled a dispute between the equity holders and restructured the debt.

Nadowessioux Properties, LTDThis Texas-based entity owned a multi-million dollar vacation home located in Jackson Hole, Wyoming. The Chapter 11 case prevented foreclosure and ultimately resolved a contentious construction dispute with the builder. The property was sold through the bankruptcy process, generating a purchase price sufficient to pay off all liens.

Sapphire VP LPRepresented this Class A South Padre Island beachfront condominium project by filing Chapter 11 to avoid foreclosure and then successfully confirming a plan of liquidation whereby the remaining land and units were swapped for the outstanding debt.

Texas Systems & ControlsRepresented this custom manufacturer of skid modules, components used by power plant and oil refineries, in a successful restructure of debt and equity.

United DCRepresented this warehouse/distribution company in a successful reorganization primarily by using the bankruptcy process to resolve unused capacity losses by reducing unused warehouse space.

Waco Town SquareRepresented this Class A condominium project located in Waco, Texas by filing Chapter 11 in order to eliminate minority equity holders who refused to pledge additional capital needed by the project. The remaining equity holders contributed new capital and we successfully restructured the debt.

DigeratiWe represented this small publicly traded company in its Chapter 11 case. We confirmed a plan which provided for all creditors to be paid in full and restored 100% of the equity to the public shareholders. We preserved a net operating loss carryforward in the approximate amount of $18 million which will shelter income earned by the company for many years to come.

Westbury HospitalWe represented the landlord in this case where the Debtor operated a community hospital in Houston treating indigent mental patients. As the managers were being investigated for Medicare fraud, we successfully obtained the appointment of a Chapter 11 trustee and provided the trustee with DIP financing in order to keep the facility opened. After lengthy negotiations with the government, we succeeded in selling the hospital and renegotiating the lease with the buyer group.

Horton-Wison DeepwaterWe acted as local counsel in this Chapter 11 case and assisted primary counsel with confirmation of a consensual plan.

RB ProductsWe acted as counsel to this Chapter 11 debtor which operated a chemical company. The debtor became delinquent on its bank financing because its chemical processing systems was not generating products up to spec. The company hired engineers to fix the problem and we tried to negotiate a forbearance agreement or extension with the lender. The lender refused and we filed the Chapter 11 case. After several months, the debtor was able to fix the problems with its chemical processing facility and build up its sales. We prepared and confirmed a Chapter 11plan around the increased revenue.

Colorado Fayette HospitalIn this case, we successfully represented a buyer who acquired this small community hospital out of bankruptcy through a sale free and clear. The client re-developed that hospital and it is now operating and serving the community.

Victory MedicalIn this case, we represented five surgical hospitals which were compelled to file for bankruptcy because insurance companies simply stopped payment on their out of network procedures. The goal of the bankruptcy was to sell the hospitals and preserve the claims against the insurance companies for the benefit of the creditors. We successfully sold several of the hospitals as going concerns and the assets of several hospitals that were shut down in an orderly manner. We recently confirmed a plan which provides for a trustee to pursue $80 million in unpaid insurance claims. If the trustee is successful in pursuing even a small fraction of these claims, the creditors will receive a significant return.

CREDITOR REPRESENTATION

Quality Lease Service, LLC, Quality Lease Rental Service, LLCRepresented the secured lender in a successful Chapter 11 reorganization of privately-owned oil field services companies headquartered in Victory, Texas that provided energy companies throughout Texas with drill site services, equipment rentals, and rig houses. The plan provided for the sale of the service companies while prosecuting contentious litigation by Quality’s previous owners.

Westbury HospitalWe represented the landlord in this case where the Debtor operated a community hospital in Houston treating indigent mental patients. As the managers were being investigated for Medicare fraud, we successfully obtained the appointment of a Chapter 11 trustee and provided the trustee with DIP financing in order to keep the facility opened. After lengthy negotiations with the government, we succeeded in selling the hospital and renegotiating the lease with the buyer group.

PUBLICATIONS

STRATEGIC SOLUTIONS FOR BANKRUPTCY LAW IN TEXAS SINCE 1969

For more than 40 years, individuals, investors, businesses, community groups, management companies and financial institutions have trusted the bankruptcy lawyers at Hoover Slovacek LLP for practical, cost-effective representation. Contact our Austin and Houston law firm online or by calling (713) 977-8686 to discuss how the firm might benefit you.